The government has announced significant reforms to the leasehold system in England and Wales, representing one of the most substantial changes to residential leasehold ownership in decades.

Under the proposed changes, ground rent on existing residential leases will be capped at £250 per year, reducing to a peppercorn rent after 40 years. This is a major practical shift for current leaseholders, many of whom have faced high or escalating ground rents that increase in line with inflation or market rates, often creating difficulties when remortgaging or selling. The reforms are expected to benefit over five million leaseholders and could result in savings of several thousand pounds over the life of a lease.

The reforms also aim to rebalance the relationship between leaseholders and landlords. They include easier conversion to commonhold, giving homeowners a stake in the ownership of their building and a direct say in management decisions including budgets, maintenance and ongoing costs. Greater transparency around service charges is also a key feature, helping leaseholders understand what they are paying for while providing landlords with clearer processes for managing costs and accountability.

For leaseholders, buyers, landlords and investors these changes are likely to have a meaningful impact on property ownership, values and long-term planning. While some elements of the reforms are still progressing through Parliament, now is a sensible time to review existing lease terms, particularly ground rent and service charge provisions. Anyone considering a lease extension, freehold purchase or property transaction may also wish to seek advice before proceeding, as the reforms could affect both cost and future planning.

Our Property team advises on all aspects of leasehold ownership, including lease reviews, extensions and commonhold conversions. For tailored guidance, please contact us.